Withdrawal of Legal Tender Character of the Old Bank Notes in the denominations of Rs. 500 and Rs. 1000 and The Specified Bank Notes (Cessation of Liabilities) Ordinance 2016

(Updated as on February 17, 2017)

1. Why was the Scheme of Withdrawal of Legal Tender Character of the old Bank Notes in the denominations of Rs. 500 and Rs. 1000 introduced?

The incidence of fake Indian currency notes in higher denomination has increased. For ordinary persons, the fake notes look similar to genuine notes, even though no security feature has been copied. The fake notes are used for antinational and illegal activities. High denomination notes have been misused by terrorists and for hoarding black money. India remains a cash based economy hence the circulation of Fake Indian Currency Notes continues to be a menace. In order to contain the rising incidence of fake notes and black money, the scheme to withdraw legal tender character of the old Bank Notes in the denominations of Rs. 500 and Rs. 1000 was introduced.

2. What is this scheme?

The legal tender character of the bank notes in denominations of Rs. 500 and Rs. 1000 issued by the Reserve Bank of India till November 8, 2016 (hereinafter referred to as Specified Bank Notes) stands withdrawn. In consequence thereof these Bank Notes cannot be used for transacting business and/or store of value for future usage. The Specified Bank Notes (SBNs) were allowed to be exchanged for value at RBI Offices till December 30, 2016 and till November 25, 2016 at bank branches/Post Offices and deposited at any of the bank branches of commercial banks/Regional Rural Banks/Co-operative banks (only Urban Co-operative Banks and State Co-operative Banks) or at any Head Post Office or Sub-Post Office during the period from November 10, 2016 to December 30, 2016.

The facility for exchange / deposit of SBNs stands closed with effect from December 31, 2016.

3. What is the Specified Bank Notes (Cessation of Liabilities) Ordinance 2016?

The Specified Bank Notes (Cessation of Liabilities) Ordinance 2016 has been promulgated by the President of India (GoI Ordinance No. 10 of 2016 dated December 30, 2016) to provide for cessation of liabilities on the Specified Banknotes and for connected/incidental matters and comes into effect from December 31, 2016. In terms of this ordinance, with effect from December 31, 2016, the Specified Bank Notes shall cease to be the liabilities of the Reserve Bank of India and shall cease to have the guarantee of the Central Government.

A grace period has been provided during which the Specified Bank Notes can be deposited at five RBI Offices (Mumbai, New Delhi, Chennai, Kolkata, and Nagpur) in accordance with this Ordinance by Indian citizens who make a declaration that they were outside India between November 9 and December 30, 2016, subject to conditions or any class of persons for reasons that may be specified by notification by the Central Government.

For details on the exchange counter timings at the five aforesaid Regional Offices of RBI, please click here.

The Reserve Bank, if satisfied after making the necessary verifications, that the reasons for failure to deposit the notes till December 30, 2016 are genuine, will credit the value of notes in the KYC (Know Your Customer) compliant bank account of the tenderer.

Holding the specified banknotes (SBNs) for the purpose of deposit by Resident Indian citizens who were abroad during November 9, 2016 to December 30, 2016 and Non Resident Indian citizens who were abroad during November 9, 2016 to December 30, 2016 is permissible during grace period. With effect from January 2, 2017 Resident Indian citizens who were abroad during November 9, 2016 to December 30, 2016 can avail this facility upto March 31, 2017 and Non Resident Indian citizens who were abroad during November 9, 2016 to December 30, 2016 can avail this facility upto June 30, 2017. While there is no monetary limit for exchange for the eligible Resident Indians, the limit for NRIs will be as per the relevant FEMA Regulations. In terms of Section 6 of the Ordinance, whoever knowingly or wilfully makes any false declaration shall be punishable with a fine which may extend to 50,000 INR or five times the amount of the face value of the SBNs tendered whichever is higher. Any person aggrieved by the refusal of the Reserve Bank to credit the value of notes as mentioned above may make a representation to the Central Board of the Reserve Bank within 14 days of the communication of such refusal to him/her.

In terms of Section 5 of the Ordinance, from December 31, 2016 no person shall knowingly or voluntarily hold, transfer or receive any specified banknotes. After the expiry of grace period, holding of not more than 10 notes in total, irrespective of denomination or not more than 25 notes for the purpose of study/ research/ numismatics is permitted. In terms of Section 7, contravention of Section 5 shall be punishable with fine which may extend upto 10,000 INR or five times the face value of the SBNs involved in the contravention, whichever is higher.

In case the contravention/default in terms of Sections 6 and 7 is by a company, every person who was in charge of and responsible to the company at the time of contravention/ default shall deemed to be guilty and will be liable to be proceeded against and punished. If the offence is proved to be attributable to the conduct by any director/manager/secretary/officer/employee of the company, such person shall also be deemed to be guilty of the offence and will be liable to be proceeded against and punished accordingly.

4. How Indian citizens who were abroad exchange the SBNs?

In terms of Paragraph 4.1 of the GoI Ordinance No. 10 of 2016 dated December 30, 2016 on “The Specified Bank Notes (Cessation of Liabilities), a facility for exchange of SBNs is made available for the resident and non-resident Indian citizens (Indian passport required) who could not avail the facility from November 10 to December 30, 2016 on account of their absence from India during the aforementioned period. The facility will remain open for residents from January 2, 2017 to March 31, 2017 and for NRIs from January 2, 2017 to June 30, 2017 at five Reserve Bank offices at Mumbai, New Delhi, Chennai, Kolkata, and Nagpur.

The facility can be availed only in individual capacity and only on one occasion during the period. No third party tender is permissible under the facility.

This facility will not be available for Indian citizens resident in Nepal, Bhutan, Pakistan and Bangladesh.

The details of the facility including terms/ conditions and modalities thereof are available in our circular DCM (Plg) No 2170/10.27.00/2016-17 dated December 31, 2016.

Link to tender form for Resident Indians and NRIs (holding Indian passport) available here.

5. Is the facility for exchange of SBNs by NRIs available outside India?

No. For NRIs the facility is available from January 2, 2017 to June 30, 2017 at five Reserve Bank offices at Mumbai, New Delhi, Chennai, Kolkata, and Nagpur. The limit of exchange for NRIs will be as per the relevant FEMA Regulations.

6. Is the facility available to Overseas Citizens of India (OCI)/Persons of Indian Origin (PIO)?

No, the facility is not available to people who are not Indian citizen.

7. Is the facility available to resident Indians?

No, the facility is not available to all resident Indians, but only to those who were not in India during the period November 9, 2016 to December 30, 2016.

8. How much amount can I withdraw from an ATM?

With effect from February 1, 2017 limits on cash withdrawals from ATMs have been removed. Banks may, at their discretion, have their own operating limits as was the case before November 8, 2016, subject to the overall cash withdrawal limit for an account.

9. What are the cash withdrawal limits for accounts?

It has been decided to remove the restrictions on cash withdrawals from Saving Bank accounts in a two step process as under:

Effective February 20, 2017, the limits on cash withdrawals from the Savings Bank accounts will be enhanced to ₹ 50,000 per week (from the current limit of Rs. 24,000 per week); and

Effective March 13, 2017, there will be no limits on cash withdrawals from Savings Bank accounts.
Cash withdrawal limits for Current accounts/ Cash credit accounts/ Overdraft accounts stand withdrawn with effect from January 30, 2017.10. Does the cash withdrawal limit for a savings bank account apply to withdrawals from bank account of one bank from another bank?

These limits are not applicable to cash withdrawal from a bank account by one bank from another bank, Post Office, Money Changers operating at International airports and operators of White Label ATMs. The branches maintaining Currency Chests have been advised to accommodate the requests from other branches in their vicinity – linked or otherwise – for supply of cash.

11. Can I withdraw cash against cheque?

Yes, you can withdraw cash against withdrawal slip or cheque subject to applicable cash withdrawal limit (including withdrawals from ATMs and over the counter) from the bank accounts.

12. Can I make use of electronic (NEFT/RTGS /IMPS/Internet Banking/Mobile banking, etc.) mode?

You can use NEFT/RTGS/IMPS/Internet Banking/Mobile Banking or any other electronic/non-cash mode of payment. In order to meet the transactional needs of the public through digital means, additional measures have been introduced by way of special dispensation for small merchants and enhancement in limits for semi-closed Prepaid Payment Instruments (PPIs).

13. What is being done for the farmers?

Farmers are allowed to draw upto Rs. 25,000 per week in cash from their loan or deposit accounts subject to their accounts being compliant with the extant KYC norms. Effective February 20, 2017, the limits on cash withdrawals from the Savings Bank accounts will be enhanced to Rs. 50,000 per week (from the current limit of Rs. 24,000 per week); and

Effective March 13, 2017, there will be no limits on cash withdrawals from Savings Bank accounts.

Towards ensuring unhindered farming operations during the Rabi crop season, NABARD would be utilizing its own cash credit limits up to about ₹ 23,000 crore to enable the DCCBs to disburse the required crop loans to PACS and farmers. Banks with currency chests have been advised to ensure adequate cash supply to the DCCBs and RRBs. Adequate cash supply should also be ensured for rural branches of all commercial (including RRBs). Bank branches located in APMCs may also be given adequate cash to facilitate smooth procurement.

14. Where can I get more information on this scheme/ ordinance?

Further information is available on our website (www.rbi.org.in) and the website of the Government of India (www.finmin.nic.in)

Also see:

All You wanted to know from RBI about: Withdrawal of Legal Tender Status of Rs. 500 and Rs. 1000 Notes

15. If I have a problem, whom should I approach?

You may approach the control room of RBI by email or on Telephone Nos 022 22602201/022 22602944

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42 responses to “FAQs on withdrawal of Rs. 500 & Rs. 1000 Banknotes (17.02.2017)”

  1. Banshilal Purohit says:

    A employee retire 28.Feb.2017.
    He become In senior citizen which date 01.03.2017.
    Fy 2016-17 taxable income 508100.
    Rebate U/C 87A which applicable or not due to Senior Citizen.
    Pl. Advise and clarification.
    If possible send your whatsapp number.

    Banshilal Purohit, Nagaur

  2. Gopinadhan says:

    I am an Indian with Resident status.
    I have got ₹10000 in the demonitized ₹1000 Notes. It was kept inside a book. It was found out later. Me wants to encash it by tendering before The Reserve Bank of India.

    Please advise me as to how can I can encash it without penalty.

  3. I am overseas citizen of India . Have arrived in Delhi on 18 Feb from UK. Approached the Customs Officer to certify that i have brought old Rs 500 and Rs 1000
    notes from UK for exchanging into new notes (Rs 25000 in total). He showed me taxguru site which mentioned that OCI/PIO
    cannot exchange old notes. He , therefore, refused to certify. In the circumstances what option is available to me. Mine Rupees are hard earned and not black money.I am in India until 17 March 2017.

  4. Bharat Jain says:

    During the demonetization period my wife was at her native place and she gave birth to child by cesarean delivery and due to it she could not move from native place to Surat. Now she came to Surat after 3 months rest after delivery and she found some old currency notes in his locker.
    Now she want to exchange but we come to know that their is no any policy to exchange it for normal Indian People.

  5. MITHUN says:

    Some charitable, religious & educational institutes accepted donations, subscriptions & fees (tuition fees in case of educational institutes) in old notes after 08-11-2016 and deposited them in their bank accounts.

    Banks have also credited the same in their accounts and most of the money have been withdrawn now from these accounts.

    What is the legal validity of these deposits?

    What will Government do if these organizations show these amounts as their receipts and show matching expenses accordingly, as their income is already exempt under income tax?

  6. MITHUN says:

    Some charitable, religious & educational institutes accepted donations, subscriptions & fees (tuition fees in case of educational institutes) in old notes after 08-11-2016 and deposited them in their bank accounts.
    Banks have also credited the same in their accounts and most of the money have been withdrawn now from these accounts.

    What is the legal validity of these deposits?

  7. Subrahmanyam says:

    What about those Indian citizens who are touring outside, and who can not be back in India by 30th
    December 2016, and who have the old 500 and 1000 rupee notes( carried along with them abroad)
    Can they deposit those notes into their bank accounts upto 30th March 2016? The FAQ should have made this pint also clear. I have raised this quiry with RBI and PMO’s office, but no reply yet as anticipated

    • Subhash says:

      My daughter is studying in USA and while going to USA in July, 2016, she was carrying some money in old Rs.500 and Rs.1000 notes. she will be able to come back in May, 2017 only.

      How she can exchange or deposit those money with her. Office of Indian embassy is also very far of place from her place of study.

  8. PRAVIN SHETH says:

    DIGITAL PHOTOGRAPHS I MEAN, NOT OF QUE, BUT OF INDICATING BOARD,WHERE IT CLERLY
    INDICATES WHICH WAY SENIOR CITIZENS HAVE TO GO,,.

  9. PRAVIN SHETH says:

    date 30 November 2016
    referring point no. 27, as regards to the issue of senior citizens, we do not find any separate icon board for senior citizens, at bank gate entry,
    i have visited axis bank , surat on 15th November 16 and SBI on 28 November , both at afternoon, there was lot of rush and big que, but when i inquired, where is separate que for senior citizens, and where is board, indicating it,the simple reason was WAIT, there is lot of rush AND WE WILL try, as if they are obliging senior citizens, and i saw also many senior citizen were in a que also, so, the ground truth is different, , HOPE , NECESSARY INSTRUCTIONS ARE PERCOLATED AT GROUND LEVEL ALSO, AND IF THEY ALREADY HAVE MADE SOME ARRANGEMENT, FOR A SEPARATE QUE FOR SENIOR CITIZENS, PL LET US SEE THE PHOTOGRAPH WITH DIGITAL DATE.

    how that to withdraw our own money,-( from closing balance prior to 8 November 16, ) or to deposit new notes, we have to go to our own principal bank where we have opened our account- is it not difficult for outstation customers to go al the way to their principal branch and is it not incurring unneccesarily additional cost, to customer, what is the value of gigitalisation!!!,
    more over, at ATM center also , there is no separate que.,
    we appreciate the present change over system BUT, pl. try to understand our constraints also,
    HOW CAN GOVT. HELP US ?
    from our physical structuure, and appaearance, can bank not recognize, that at least we are senior citizens and to above 60 + !!!!, for such cases, bank should issue us a separate icard so that, no one can stop us and ask to stand in normal que,
    banjk shoukd learn lesion from railway- as there are separate boards for senior citizen, so no one can object on our priority.
    senior citizen, age 75, gujarat,
    pl, excuse for any english or any typing mistakes

  10. Ramana says:

    Dear Sir,
    My wife received a site from his father as gift. We sold the site in Aug 2016 and deposited sale consideration in my wife account. Is it necessary to pay tax? If yes what tax ? Which tax and what percentage? Or can we buy site with the same amount or use for construction of house? Please suggest us.

  11. T N PILLAI says:

    A Good FAQs and informative. But laws on violations and offenders are not listed. The law breakers will make all norms to break the schemes. Unless these cases are booked, full success is a question mark. Also Banks responsible for fraudulently exchanging currency must also be booked and investigated

  12. B MALYADRI says:

    Here at Visakhapatnam, the banks are not accepting pre 2005 Rs 500 & 1000 notes. What shall we do in that case.

  13. Hemant Taparia says:

    Can any one explain why there is a difference :

    Current a/c having cash credit (CC) facility is allowed to withdraw only 24000/- and having Normal current account can withdrawn 50000/-.

  14. Dr.Naresh L.Joshi says:

    It is really important bold step to demonetise of currency I support this patriotic action taken by GOI Good information given by RBI through FAQS.

  15. Auditor Ramani says:

    Choose a demonitisation day (say) once in 3 yrs. Let the next demonitisation day be (say) 30/09/2019. This can be announced in advance.. Ten days before that day all ATMs would stop functioning and cash will be filled in ATMs. From 01/10/2019 ALL currency of earlier period would be invalid and they can be deposited or exchanged only in bank/PO as the case may be till 31/12/2019. Just because we have lot of time RBI,Banks, households all can plan their requirements. Thus, after the said date the ALL old currency would be invalid and hence they have to come to the main stream before the due date. This way stacking of notes in sacks, under beds, in pillows, in lofts, etc.. would come to an end.Prices will automatically get settled. No currency and hence criminals will be away from politics and only genuine people who are not greedy about money will remain.All sorts of corruption will come to an end.. Most important the aspired cash less economy would start functioning as a miracle.

  16. MANOJ KUMAR MALL says:

    can i deposit 500 or 1000 rupees notes in my PPF account

  17. Kochumani says:

    Modi Govt. has done a good work. But, instead of introducing 2000 note, should have instroduced Rs. 200 or 300 note as bribers again have a chance of hoarding black money. They can happily accept Rs. 2000/- note instead of Rs. 1000/- double benefit.

  18. VIVEKANANDAN M says:

    I have to come to USA on 04/11/2016 and planned to stay till 23/04/2017. I have some cash at home India which cannot accessed by anybody else. The cost of travelling going back to India Will be more than amount to be deposited in the Bank. I have sent a mail to RBI but till now no reply. How should I go about in this case.

  19. Bansi Lal Bijlani says:

    Highly informative. Thanks for the same

  20. arvind says:

    can i deposit rs 500 and rs 1000 notes in my PPF post account

    • Raj Kumar Mittal says:

      Yes old notes can be deposited in PPF account and such amount shall be reported to Income Tax like deposit in bank account

  21. K.LAKSHMAN. says:

    Banks should be asked to open special counters for this purpose until the position eases.The tendency
    to direct customers to automated cash collecting machines should be curbed and every assistance provided for smooth transactions at the Branch, under these extraordinary circumstances. K.LAKSHMAN.

  22. N.k.chhabra says:

    I want to request the Finance Minister and Reserve Bank Governor to issue firm order that those who write on the currency notes shall not be able to make use the currency notes and the shall become void.
    This is very important and publicity should be given.
    All should feel because we love our country

  23. Nem Singh says:

    If you have much more money in stock deposit it in bank or distribute to zero balance account holders so that they can utilise your black money for personal needs and general public interest in place of agents in the market who assure you for safe custody of your money.

    Deposit in bank and pay tax and relax for future.

  24. Suresh B says:

    Problem in Repayment of Credit card with in due date or Payment of EMI against Personal Loan or Car Loan or Home loan will be affected due to inadequacy of cash deposit on 9th or 10th Nov’16.Will they waive off any financial charges levied by the Bank or Financial Institution or the party? and also waiving cheque bouncing charges?

  25. R VENKATARAMAN says:

    how much money in 500 rupee notes can be DEPOSITED in my bank per day?

  26. Rajesh Yadav says:

    The questionnaire is very information and upto the mark.

  27. Udaya says:

    Modi sir is doing work for betterment of AAM AADMI

  28. MURALEESWARAN says:

    Dear Sir,
    We are running a car dealership company, i have one doubt regarding the acceptance of existing Rs.500 and Rs.1000 cash. Whether we can accept cash of such notes supported by a valid PAN of the customers. The same cash can be deposited within 31st December 2016?

    • Airy and Associates says:

      You can accept such cash on your behalf as sale or revenue and you can deposit such amount by 30 Dec. 2016.
      You don’t need to take PAN of customers because a businessman may have thousands of customers and banks have not that time to see each and every PAN of your customer.

      For any query email us: airyandassociates@gmail.com

      • Vidyadhar Swami says:

        Mr. Airy &…. are you really in air? Don’t misguide the public? How can a car dealer accept illegal currency? Kindly tell me Mr. Airy, who told you?

  29. Girish says:

    Well, Modiji has attempted a good move . However he should have brought in Rs 200 denomination notes instead of Rs 2000, the reason being as a common man for e.g if you have to do a transaction there is no one who will give you change for Rs 2000 denomination. This currency will further increase the problem of a common man for obtaining change.
    The hoarder the high-value denomination like Rs 2000 will be very easy to hoard.
    Experts in Finance deptt in Govt have left the loophole for the big timers.

  30. Sumit Kumar Swarnakar says:

    Achhe din aane wale hai…

  31. Sumit Kumar Swarnakar says:

    A landmark decision by Modi Sarkar. I Heartily welcome it.

    Similarly a Big Question was there on new Rbi governor Mr. Urjit Patel. Whether he is eligable or jot? whether he can fulfill the vacancy of Ex-Governor Mr. Raghuram Rajan?

    and what I personlly believes that “We got our Answer”
    Right????

  32. MADAN LAL ARORA says:

    Excellent information

    • Sunil Nagar says:

      Dear Sir
      I was purchased Plot in Jan 2013 & Construction House with Material from Contractor in Feb 2015. After Complete House in July 2015 I Want sale combined property (Plot+House) in Nov 2016 hence i want how to calculate Gain if Short Term ya Long Term

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